3/11/2009 @ 6:00PM

China's Billionaire Drop-Offs

Brisk economic growth made China one of the world’s fastest-growing hot spots for new billionaires in the past decade. Its number jumped from none in 2003 to 42 last year.

This year, China ranks high on a less cheerful list: countries with the most billionaire drop-offs. The Middle Kingdom lost 19 billionaires this past year, making it the No. 5 country on our list in terms of number of drop-offs. That’s the most after the U.S. with 125, Russia with 55, India with 29 and Turkey with 21.

A big reason for the decline: soft real estate prices. Seven of the 19 Chinese billionaires unable to repeat this year made much of their fortune from real estate. Most hailed from Guangdong province, located just north of Hong Kong. Many developers looking to expand into new markets had bought land in other areas of China toward the tail end of the bull market and are stuck with relatively pricey inventory.

The billionaire property developers to drop this year include Xu Jiayin, Geng Jianming, Chu Mang Yee, Zhang Keqiang, Cheung Chung Kiu, Kong Jian Min and Yang Erzhu. Cheung fared among the worst: Shares in his Hong Kong-listed CC Land plunged 85% from a year ago.

Slowing international trade cut into the wealth of others. Jack Ma, a former English teacher turned Internet entrepreneur, built Alibaba.com into a great spot for buyers and sellers to exchange product information. As China’s export slowdown crimps business on both sides, shares in Hong Kong-listed company Alibaba.com tanked 65% in the past year.

Manufacturers tied to overseas customers have been hurt, too. Gao Dekang, the chairman of down-apparel maker Bosideng, dropped off the list as its shares fell nearly two-thirds in the last year. Paper maker Nine Dragons, which supplies packaging to companies that make boxes for China’s export goods, was also hit badly.

Zhang Cheng Fei, one of three family members who are Nine Dragon’s main shareholders, dropped off this year’s list. His better-known sister, Yan Cheung, who is a resident of Hong Kong and had been one of just a handful of self-made women billionaires in the world, also fell off, as did Zhang’s Brazilian-Taiwanese brother-in-law, Liu Ming Chung.

Solar energy companies that were darlings of the stock market a year ago have fallen as lower oil make relatively pricey solar less attractive. Industry entrepreneurs Xiaofeng Peng, founder of LDK, and Miao Liansheng, founder of Yingli Green Energy, both dropped off the list.

Whereas the solar entrepreneurs lost their wealth in a straightforward manner, retailer Wong Kwong Yu’s fall is more complex. The founder of Gome Appliance, China’s biggest electronics chain, has been under a cloud since November when Chinese officials suspended trading of his Gome. Wong resigned as chairman in January, and the size of his fortune is murky right now, leading us to drop him from the ranks.

Even though China has fewer billionaires this year, it still holds promise for ambitious entrepreneurs. The proof: After the U.S., China is home to more new billionaires than any other nation in the world. It welcomes five new billionaires including Wang Chuanfu, whose BYD Co. makes electric cars, and Zhou Chengjian, who listed his fashion retailer in one of the countries most successful public offerings of last year.

More than a reversal of national fortune, this year’s large number of Chinese drops-offs from our billionaires list looks more like a breather.